IB 

Union Calendar No. 834 

115TH CONGRESS 

2D SESSION H. R. 6021 

[Report No. 115–1075] 

To amend the Sarbanes-Oxley Act of 2002 to exclude privately held, noncustody brokers and dealers that are in good standing from certain 

requirements under title I of that Act, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 6, 2018 

Mr. HILL (for himself and Mr. GONZALEZ of Texas) introduced the following 

bill; which was referred to the Committee on Financial Services 

DECEMBER 12, 2018 

Additional sponsor: Mr. BEYER

DECEMBER 12, 2018 

Reported with amendments, committed to the Committee of the Whole House 

on the State of the Union, and ordered to be printed 

[Strike out all after the enacting clause and insert the part printed in italic] 

[For text of introduced bill, see copy of bill as introduced on June 6, 2018] 


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•HR 6021 RH

A BILL 

To amend the Sarbanes-Oxley Act of 2002 to exclude privately held, non-custody brokers and dealers that are 

in good standing from certain requirements under title 

I of that Act, and for other purposes. 


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•HR 6021 RH

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Small Business Audit 

5 Correction Act of 2018’’. 

6 SEC. 2. EXEMPTION. 

7 (a) AMENDMENTS TO TITLE I OF THE SARBANES8 OXLEY ACT OF 2002.—Section 110 of the Sarbanes-Oxley 

9 Act of 2002 (15 U.S.C. 7220) is amended— 

10 (1) in paragraph (3), by inserting ‘‘, except that 

11 the term does not include a non-custody broker or 

12 dealer that is privately held and in good standing’’ 

13 after ‘‘registered public accounting firm’’; 

14 (2) in paragraph (4), by inserting ‘‘, except that 

15 the term does not include a non-custody broker or 

16 dealer that is privately held and in good standing’’ 

17 after ‘‘registered public accounting firm’’; 

18 (3) by redesignating paragraphs (5) and (6) as 

19 paragraphs (8) and (9), respectively; and 

20 (4) by inserting after paragraph (4) the fol21 lowing: 

22 ‘‘(5) IN GOOD STANDING.—The term ‘in good 

23 standing’ means, with respect to a broker or dealer 

24 (as those terms are defined in section 3(a) of the Se25 curities Exchange Act of 1934 (15 U.S.C. 78c(a))), 


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•HR 6021 RH

1 that, as of the last day of the most recently completed 

2 fiscal year of the broker or dealer, as applicable, the 

3 broker or dealer— 

4 ‘‘(A) was registered with the Commission; 

5 ‘‘(B) was a member of a registered securities 

6 association (as defined under section 15A of the 

7 Securities Exchange Act of 1934 (15 U.S.C. 78o8 3)); 

9 ‘‘(C) was compliant with the minimum dol10 lar net capital requirements under section 

11 240.15c3–1 of title 17, Code of Federal Regula12 tions, or any successor regulation; 

13 ‘‘(D) had not, during the 10-year period 

14 preceding that date, been convicted of a felony 

15 under Federal or State law; 

16 ‘‘(E) does not have an associated person (as 

17 that term is defined in section 3(a) of the Securi18 ties Exchange Act of 1934 (15 U.S.C. 78c(a))) 

19 who, during the 10-year period preceding that 

20 date, was convicted of a felony under Federal or 

21 State laws for fraudulent conduct; and 

22 ‘‘(F) was not, as provided by section 

23 3(a)(39) of the Securities Exchange Act of 1934 

24 (15 U.S.C. 78c(a))— 


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•HR 6021 RH

1 ‘‘(i) expelled or suspended from mem2 bership or participation in any self-regu3 latory organization (as provided in section 

4 3(a)(26) of the Securities Exchange Act of 

5 1934 (15 U.S.C. 78c(a)(26))) or a registered 

6 futures association (as provided in section 

7 17 of the Commodity Exchange Act (7 

8 U.S.C. 21)); 

9 ‘‘(ii) subject to an order of the Com10 mission, or other appropriate regulatory 

11 agency, denying, suspending, or revoking its 

12 registration as any regulated entity; or 

13 ‘‘(iii) subject to an order of the Com14 modity Futures Trading Commission, or 

15 other appropriate regulatory agency, deny16 ing, suspending, or revoking its registration 

17 under the Commodity Exchange Act (7 

18 U.S.C. 1 et seq.) or its authority to engage 

19 in any transactions. 

20 ‘‘(6) NON-CUSTODY BROKER OR DEALER.—The 

21 term ‘non-custody broker or dealer’ means a broker or 

22 dealer (as those terms are defined in section 3(a) of 

23 the Securities Exchange Act of 1934 (15 U.S.C. 

24 78c(a))), as applicable, that— 


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•HR 6021 RH

1 ‘‘(A) as of the last day of the most recently 

2 completed fiscal year of the broker or dealer had 

3 not less than 1 and not more than 150 associated 

4 persons (as that term is defined in section 3(a) 

5 of the Securities Exchange Act of 1934 (15 

6 U.S.C. 78c(a))) registered with a self-regulatory 

7 organization (as provided in section 3(a)(26) of 

8 the Securities Exchange Act (15 U.S.C. 

9 78c(a)(26))) of which the broker or dealer is a 

10 member; and 

11 ‘‘(B) throughout the most recently completed 

12 fiscal year of the broker or dealer— 

13 ‘‘(i) did not, as a matter of ordinary 

14 business practice in connection with the ac15 tivities of the broker or dealer, receive cus16 tomer checks, drafts, or other evidence of in17 debtedness made payable to the broker or 

18 dealer; 

19 ‘‘(ii) promptly forwarded customer se20 curities and customer checks, drafts, or 

21 other evidence of indebtedness payable to a 

22 third party, including a clearing broker or 

23 dealer, in compliance with section 240.15c3- 

24 3 of title 17, Code of Federal Regulations, 

25 or any successor regulation; 


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•HR 6021 RH

1 ‘‘(iii) did not otherwise hold customer 

2 securities or cash; 

3 ‘‘(iv) if required under section 3(a)(2) 

4 of the Securities Investor Protection Act of 

5 1970 (15 U.S.C. 78ccc(a)(2)), was a mem6 ber of the Securities Investor Protection 

7 Corporation; and 

8 ‘‘(v) either— 

9 ‘‘(I) claimed exemption from sec10 tion 240.15c3–3 of title 17, Code of 

11 Federal Regulations, or any successor 

12 regulation; or 

13 ‘‘(II) claimed no exemption from 

14 such section 240.15c3–3, or any suc15 cessor regulation, or was not otherwise 

16 subject to such, because the broker or 

17 dealer did not maintain custody over 

18 any customer securities or cash. 

19 ‘‘(7) PRIVATELY HELD.—The term ‘privately 

20 held’ means, with respect to a broker or dealer (as 

21 those terms are defined in section 3(a) of the Securi22 ties Exchange Act of 1934 (15 U.S.C. 78c(a))), that 

23 the broker or dealer, as applicable, is not an issuer.’’. 

24 (b) AMENDMENTS TO REGULATIONS.—Not later than 

25 180 days after the date of enactment of this Act, the SecuriVerDate Sep 11 2014 20:30 Dec 12, 2018 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6203 E:\BILLS\H6021.RH H6021

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•HR 6021 RH

1 ties and Exchange Commission shall make any necessary 

2 amendments to regulations of the Commission that are in 

3 effect as of the date of enactment of this Act in order to— 

4 (1) carry out this Act and the amendments made 

5 by this Act; and 

6 (2) to exclude the auditors of non-custody brokers 

7 and dealers that are privately held and in good 

8 standing (as such terms are defined under section 110 

9 of the Sarbanes-Oxley Act of 2002) from the audit re10 quirements of the Public Company Accounting Over11 sight Board. 

12 (c) EFFECTIVE DATE.—This Act, and the amendments 

13 made by this Act, shall take effect on the date that is 180 

14 days after the date of enactment of this Act. 

Amend the title so as to read: ‘‘A bill to amend the 

Sarbanes-Oxley Act of 2002 to exclude the audits of privately held, non-custody brokers and dealers that are in 

good standing from certain requirements under title I of 

that Act, and for other purposes.’’. 


pamtmann on DSKBFK8HB2PROD with BILLS

pamtmann on DSKBFK8HB2PROD with BILLS
Union Calendar No. 834 

115TH CONGRESS 

2D SESSION H. R. 6021 

[Report No. 115–1075] 

A BILL 

To amend the Sarbanes-Oxley Act of 2002 to exother purposes. quirements under title I of that Act, and for dealers that are in good standing from certain re- clude privately held, non-custody brokers and 

DECEMBER 12, 2018 

Reported with amendments, committed to the Committee 

dered to be printed of the Whole House on the State of the Union, and orVerDate Sep 11 2014 20:30 Dec 12, 2018 Jkt 089200 PO 00000 Frm 00010 Fmt 6651 Sfmt 6651 E:\BILLS\H6021.RH H6021

pamtmann on DSKBFK8HB2PROD with BILLS